Macroeconomics The Fiscal Policy - 894 Words

1. Fiscal policy is defined as the use of government spending and taxation to influence the economy (Weil, 2008). All government spending influences the economy in some way, but the amount of spending and where that spending is directed will have different types of effects on the health of the economy. The same can also be said for taxation who is taxed and how creates incentives that guide the course of the economy. By contrast, monetary policy is the actions undertaken by a central bank ¦to influence the availability and cost of money and credit to help promote national economic goals (FOMC, 2012). Thus, the objective of monetary policy is to provide the means for economic activity to take place, and guide the level of economic activity in the country, whereas fiscal policy relates to specific spending choices on the part of government. 2. Keynes pointed about that fiscal policy can be used to stabilize an economy. The basic idea is that because government spending contributes to the economy, changing the level of government spending can have an effect on the health of the economy. Hayek argued that government will inherently be less efficient with respect to economic planning and resource distribution. Note that this is not a direct refutation of Keynes, because Keynes does not argue that government is the best at resource allocation, only that government intervention is sometimes beneficial during difficult economic periods. Keynes is, if nothing else, lessShow MoreRelatedMacroeconomic Policy : Monetary And Fiscal Policy1030 Words   |  5 PagesMacroeconomic Policy: Monetary Fiscal Policy Monetary policy is used by the Fed to regulate the supply of money and credit in the economy. The purpose of monetary policy is to promote maximum employment, maintain the price of goods, and to control long-term interest rates to increase economic growth. Right now, monetary policy and fiscal policy are accommodating. At this point, the inflation rate is too low at 0.1 percent, which indicates some uncertainty in the economy. Inflation rates that areRead MoreMacroeconomic Policies Of Fiscal And Monetary Policies Essay1387 Words   |  6 Pagesmake use of different macroeconomic policy instruments such as fiscal and monetary policies to stabilize the macro-economy and brig about growth to their respective countries. Yet there are debates on the efficiency of each of these instruments. Some economists argue that fiscal and monetary policies are ineffective in all countries while the other group argue that they are important policy tools, though their effectiveness depends on conditi ons in the economy. Fiscal policy is one of the commonlyRead MoreMacroeconomic Objectives Of Fiscal And Monetary Policies1692 Words   |  7 PagesMacroeconomics focuses on the economy as it experiences aggregate changes, analysing outcomes of government policies and how adequate these can be. There are many theories on the best policies to achieve the macroeconomic objectives successfully. In this essay, I will be explaining the aims and objectives of fiscal and monetary policies, the effects of quantitative easing, and how the 2008 Financial Crisis affected the United Kingdom as well as the global economy. Governments use macroeconomic objectivesRead More1. Monetary and Fiscal Policy and Its Impact on Business Decision Making 2. Open Economy Macroeconomics-Mundell –Fleming Model and Its Application5514 Words   |  23 Pages1. Monetary and fiscal policy and its impact on business decision making 2. 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Definitions: FISCAL POLICY: â€Å"A combination of government spending and taxation used to achieve macroeconomic management. (The flow of government money in and out of the treasuryRead MoreNotes On Macroeconomic Policy And Monetary Policy974 Words   |  4 PagesReorienting macroeconomic policy Feb 12th 2010, 16:33 by S.D. | WASHINGTON This article is written from a positive standpoint it also discusses Blanchard and Co.s list of the oversights and mistakes of Great Moderation macroeconomics and macro policy. Which include some items I will discuss such as: fiscal policy, monetary policy, monetary policy focused exclusively on inflation and used only one target the policy rate, and financial regulation was in its own silo, outside the macro policy frameworkRead MoreNew Classical Macroeconomics Arose From The Monetarism And Rational Expectation School Essay922 Words   |  4 PagesIntroduction New Classical Macroeconomics arose from the Monetarism and Rational Expectation School in the 1970s and follows the tradition of classical economics. If the market mechanism is allowed to play its role spontaneously, which could solve the unemployment, recession and a series of macroeconomic issues. Keynesian economists believe that changes in the money supply will lead to changes in effective demand that will changes in the total economy. For economic cycle fluctuation, Keynesian economistsRead MoreMeg Guild . Mr.Bare . Economics . 31 April 2017. Market942 Words   |  4 PagesMeg Guild Mr.Bare Economics 31 April 2017 Market Place Essay Five Key Questions about Macroeconomics Policy The recession in 1974—1975 and two other back to back recessions in 1979—1982, which sent the employment rate to 11%. The inflation rate rose into double digits then plummeted. A period of Great Moderation came after 1985, and the recession of 1990—1991 was more manageable than the previous recession. Unfortunately, this period of tranquility was followed by the Great Recession whichRead MoreMacroeconomic Policies Of National Development1117 Words   |  5 PagesIntroduction Macroeconomic is a study of an economy in an aggregate. Macro economy defines economic changes that affect household, companies and market. Macro economy can be used to analyze the things that influence policy goals such as economic growth, price stability, employment and the achievement of sustainable balance sheet. Macroeconomic problems occur in every country, both developed countries and developing countries. Therefore, the government created the macroeconomic policies so that nationalRead MoreRelationship Between Macro Environment And The Demand For Dairy Product1342 Words   |  6 Pagesbetween the performance of the macroeconomic environment and the demand for dairy products. To begin with, the demand for dairy products are influenced by several factors, for example, the price, price of substitutes, income and demographic effects (Heien and Wessells 1988). Excluding the population factors, the other factors could be affected by macroeconomics. According to Erten and Ocampo (2012), the commodity prices are related to the situation of the macroeconomic. Also, the income distribution